RBI relaxes borrowing rules for mobile auction winners

MUMBAI (Reuters) - The Reserve Bank of India (RBI) has relaxed overseas borrowing rules for successful bidders in the country's cellphone airwaves auction, making it easier for them to raise money to pay the cash-strapped government.

The RBI said on Monday the winning bidders could use short-term foreign currency loans as bridge finance, without seeking approval from regulators.

The companies can then replace these short-term borrowings with long-term external (or overseas) commercial borrowings (ECB), provided the ECB is raised within a period of 18 months from the drawdown of the bridge finance, it added.

The mobile operators will also be able borrow from their parent companies without any limit, provided the parent owns a minimum 25 percent equity in the local company, the RBI added.

The central bank said successful bidders making upfront payments for spectrum via rupee loans would be able to refinance those loans with a long-term ECBs, also without seeking regulatory approval.